Proposed New York VLT Plan: More to Purses, Tracks

The head of the New York Senate Racing Committee is pressing a new video lottery terminal plan that would give more money to racetracks and purses by giving back less in winnings to bettors.

The measure, introduced Feb. 5, comes on the heels of a controversial proposal by Gov. George Pataki that would give more VLT revenue to racetracks by taking away money from purses and breeding funds. The plan by Sen. William Larkin is intended, aides said, is designed to get the racetracks operating the VLTs. The Pataki plan envisions no VLTs for at least a year.

The VLT law was approved at the end of 2001, but tracks have complained the program would, under current revenue-sharing numbers, amount to a money-loser.

Larkin's proposal would change existing VLT split so that 91%, instead of 92%, of all money bet is returned to bettors in the form of winnings. That would increase to 9% the amount that would be shared by state education programs, costs for administering the program by the state Lottery Division, and racetracks, purses, and breeding funds.

Under the current VLT law, 60% of what is left after winnings are paid goes to education, 25% to the racing industry, and 15% to the Lottery Division. Larkin's proposal changes those splits to 55% for education, 10% to the Lottery Division, and 35% to the racing industry.

The legislation assumes $1.138 billion would be bet through the machines in just the first year of the operation.

In return for a higher share, racetracks would be responsible for their own VLT advertising budgets and be required to ensure funds go to improve their facilities, including stable areas. The plan also directs the state Racing and Wagering Board to ensure that VLT facilities are designed "in a manner that enhances the architectural and esthetic beauty of both the VLT gaming facility and the track's racing, backstretch, and paddock facilities."

Larkin wants tracks to ensure VLT facilities are not just slapped together but are done in a way to attract not just regular bettors but tourists as well.

The plan would also extend the VLT gaming hours from 10 a.m. to 10 p.m. under current law to 10 a.m. to 2 a.m.; on Sundays the facilities would close by 10 p.m. The current 2007 expiration of the VLT law would be extended to 2009.

"The problem with the current law seems to be that the racetrack vendors were not given adequate financial support early in the program to ease cash flow problems in raising sufficient capital to construct and operate adequate VLT facilities," said a memo from Larkin. "The plan, by giving more to tracks up front but then reducing their share in subsequent years, will help get the program moving faster--thereby bringing more money to the deficit-ridden state budget."

The Larkin memo said the state may be losing $56 million a year the VLT program could generate for education programs. The VLT law also faces a lawsuit that claims, in part, the program is illegal because the constitution forbids sharing of lottery proceeds with anything other than education programs.